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Creditor Insurance in Brazil

  • January 2016
  • -
  • Finaccord
  • -
  • 30 pages

Finaccord’s report titled Creditor Insurance in Brazil offers uniquely detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, as acquired by individual borrowers in Brazil. Drawing on the results of a survey of 113 lenders, the study analyses the distribution of creditor insurance by banks and other lending institutions, how provision rates vary for different lending products, operating models used for arranging creditor insurance, and distribution partnerships weighted by the size of distributors. The PartnerBASE™ dataset that accompanies the report details all creditor insurance distribution deals traced by Finaccord. In short, this study will provide you with the definitive guide to current and future opportunities in creditor insurance in Brazil.

Key features of this study plus the PartnerBASE™ dataset and market data annexe that accompany it include:

- quantification of creditor insurance market size and growth with a timeline from 2011 to 2015 and onwards to 2019: how much is this market worth in Brazil and what is its future development potential?

- segmentation of this market both by underlying loan type (differentiating between mortgages, point-of-sale automotive finance, other consumer finance and credit card loans) and by type of cover (differentiating between cover for death / permanent disability and temporary incapacity / unemployment);

- consideration of operating models used for creditor insurance: how advanced is the use of captive and joint venture underwriters by lending institutions in Brazil and what are the opportunities for external underwriters?

- calculation of weighted provider share of partnerships: Finaccord’s unique quantitative analysis helps to identify which underwriters of creditor insurance hold the relationships that offer the most potential;

- investigation into alternative distribution channels for selling creditor insurance: a number of factors could increase the potential for entities other than the lending institutions themselves to sell creditor insurance in Brazil.

Table Of Contents

Creditor Insurance in Brazil
CREDITOR INSURANCE IN BRAZIL

TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
This report provides a comprehensive analysis of loan-related insurance policies in Brazil 3
Rationale 3
The report tracks over 150 separate initiatives for marketing creditor insurance through lending institutions 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 5
Creditor insurance 5
Mortgages, consumer finance and credit cards 5
Weighted provider share of partnerships 6
Operating models 6
Abbreviations and exchange rates 7
PartnerBASE and market data annexe 7
Finaccord 7
20 MARKET ANALYSIS 9
Banks and other lending institutions covered 9
Introduction to the banking sector 10
In terms of its total number of retail customers Bradesco leads the market 10
but government-owned Banco do Brasil is the largest bank by total assets 10
The ten largest banks account for over 85% of assets 10
but total assets do not necessarily correlate with retail customer numbers 10
Consumer lending market size and growth 11
Mortgage lending 11
Growth in mortgage balances outstanding began to taper off in 2015… 11
Non-mortgage lending 12
… and the value of total non-mortgage consumer lending balances has declined in real terms 12
Credit and other pay later cards 13
Credit and other pay later cards per capita reached 311 by the end of 2015 13
As a percentage of GDP, lending to the private sector has grown rapidly in recent years 14
but a weakening economy has deeply affected the lending market and wider banking sector 14
Creditor insurance provision rates, operating models and partnerships 15
Creditor insurance linked to mortgages 15
All mortgage lenders covered by the research offer related creditor insurance 15
with Aliança do Brasil and Caixa Seguradora ranked most highly in the weighted analysis 15
A number of banks utilise insurers that are co-owned by Banco do Brasil and MAPFRE… 15
… with two other joint venture underwriters also present in this sector 15
Creditor insurance linked to consumer finance 18
Creditor insurance is on offer from the vast majority of institutions granting non-mortgage loans… 18
… with some partnerships replicating those for mortgage-related cover… 18
… albeit with a number of others that are unique to this segment… 18
… in which more than 20 underwriters hold one or more relationships with lending institutions 18
Creditor insurance linked to credit cards 21
A majority of credit card issuers have an arrangement for related creditor insurance… 21
CREDITOR INSURANCE IN BRAZIL
© FINACCORD (01/2016) II
… with Bradesco Seguros ranked first this time by weighted share of partnerships 21
Creditor insurance risk coverage 23
Larger lending institutions are generally more likely to offer more comprehensive insurance policies… 23
… as is clear from the unweighted and weighted analyses of policy risk coverage 24
Performance of key creditor insurance underwriters 25
The creditor insurance market share of Aliança do Brasil has grown rapidly in recent years… 25
having overtaken Caixa Seguradora in 2012 25
Alternative distribution channels 26
Creditor insurance is available from other sources but rarely, if ever, as a stand-alone product 26
Creditor insurance market size, growth and forecast 27
Creditor insurance policies linked to consumer finance account for the majority of the market value… 27
albeit those linked to mortgages grew the most by far between 2011 and 2015 29



LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Creditor insurance gross written premiums in Brazil, segmented by policy and cover type, 2011, 2015 and 2019 (table) (forecast) 2
10 INTRODUCTION 3
Banks and other lending institutions in Brazil contacted by Finaccord, segmented by type 4
20 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Brazil (absolute and per capita), 2011 to 2015 11
Consumer non-mortgage lending balances outstanding in Brazil (absolute and per capita), 2011 to 2015 12
Credit and other pay later cards issued and per capita in Brazil, 2011 to 2015 13
Key data points for the consumer lending market in Brazil, 2011 to 2015 (table) 14
Provision of creditor insurance linked to mortgages in Brazil, 2015: provision rate, operating models and weighted provider share of partnerships 17
Provision of creditor insurance linked to consumer finance in Brazil, 2015: provision rate, operating models and weighted provider share of partnerships 20
Provision of creditor insurance linked to credit cards in Brazil, 2015: provision rate, operating models and weighted provider share of partnerships 22
Unweighted risk coverage of creditor insurance policies in Brazil, segmented by type of underlying product, 2015 23
Weighted risk coverage of creditor insurance policies in Brazil, segmented by type of underlying product, 2015 24
Market share of top 15 underwriters of creditor insurance in Brazil, 2010 to 2014 (table) 26
Creditor insurance gross written premiums in Brazil, segmented by policy type, 2011, 2015 and 2019 (forecast) 28
Creditor insurance gross written premiums in Brazil, segmented by cover type, 2011, 2015 and 2019 (forecast) 30
Creditor insurance gross written premiums in Brazil, segmented by policy and cover type, 2011 and 2015 (table) 30
(forecast) 30
Creditor insurance gross written premiums in Brazil, segmented by policy and cover type, 2019 (table) (forecast) 30

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